Archive for September, 2010

New “softer side” strategies at Sears

Sorry, but I’m not buying the spin…Sears continues to drift into irrelevance, especially on the softlines side of its business, making it that much more difficult to attract younger or more fashion-forward customers. Does anyone seriously believe (for example) that the French Connection customer is going to walk into a Sears store in the first place? Does Sears intend to spend the capital investment needed to make its long-neglected stores more appealing to the fashion shopper in general? There is little evidence that Sears plans to correct some of the “fundamentals” before moving into a fast-fashion experiment.

As to the Forever 21 test, this aligns with some of the other stories that BrainTrust panelists have discussed during the past year: It feels more like a way to exploit (and “sublet”) unproductive real estate rather than an organic merchandising strategy. This does not exactly parallel the Mango initiative inside JCPenney, but rather appears to be a free-standing “store within the store.” Forever 21 has something to gain by picking up new sites, but not by aligning their merchandise content with Sears.

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“The lost generation Y” for department stores?

I have taught a college-level class on retailing management and strategy for the past four years, and I can attest to the fact that the Gen Y age group is not shopping in most department stores — if my classroom “sample polling” is any indication. The primary driver is merchandise content: Most traditional department stores do not cater to the Gen Y customer in a meaningful way with relevant product.

Macy’s has probably done the best job reaching out to this customer, but not always in an affordable way — the Gen Y consumer is at least as budget-challenged as her parents. And the other department store competition (at least in this market, Milwaukee) is filled with “exclusive brands” heavily targeted to Boomers (e.g., Liz Claiborne at JCPenney, Breckenridge at Bon Ton Stores).

There is little question in my mind that other types of retailers — specialty apparel stores, off-pricers like TJMaxx, e-commerce sites — are providing the kind of relevance and execution that departments stores lack today.

August comp sales: Not so bad after all

From a RetailWire posting earlier this month, after retailers reported better-than-expected BTS sales:

I’m not sure why the naysayers were in full force before the release of yesterday’s numbers. After all, most general merchandisers released their own August comp sales over a week ago, and the numbers were better than expected. There was also other economic data released at the end of August suggesting that the U.S. economy continues to recover — slowly and erratically — from recession instead of falling into “double dip” range.

There is little doubt that negativity can cast a spell not only on consumer sentiment — even though there was a surprising uptick in August as well — but also on equity markets. The entire month of August was marked by a downdrift of stock prices and a mentality of “the end is near.” When sentiment is that sharply negative, it’s probably time to buy stocks and in particular time to focus on the upside potential of retailers and CPG companies.

Amazon enters another category: Baby basics

After seeing Amazon fresh grocery delivery trucks on the streets of Seattle last weekend, my response is “Why not”? Amazon continues to identify one market opportunity after another, and they have built years of credible brand equity around their pricing, convenience and execution. In a way, Amazon has expanded from its original roots as a book seller to become the department/discount store of the e-commerce age. So, why not get into the baby “staples” business?

The retail brain drain?

From a recent RetailWire discussion about the ongoing difficulty hiring new management talent at major retailers. My take on the discussion has a different focus:

One of the underlying trends of the past decade making it harder to attract talent to retail in the first place is consolidation. There are simply fewer places to work, and even in today’s tough hiring climate for college grads there are several other industries that probably offer more long-term career mobility. (After all, today’s Gen Y worker expects to change jobs every five years or so, and is willing to do more job-hopping than his or her parents.) The retail employment model of thirty years ago — where every city had its own department store, with a well-established training program — was unsustainable over the long haul, but it did develop a fertile national pool of retail executives.

Walmart’s push to improve micro-assortments

From a recent RetailWire comment about Walmart and its new push to tailor assortments by store location:

Given Walmart’s expertise in supply chain management, it’s essential that they put this skill to good use micro-managing assortments by store. Making this work requires great logistical execution (by both Walmart and its vendors), adept use of its data warehouse, flexible planogramming and above all a committed culture.

Target has tried over the years to tailor its assortments for local preferences and — like Walmart — has better IT tools today than ten years ago to help make it happen. The added initiative of using social-networking techniques to focus their marketing efforts makes perfect sense, and we can expect to see other retailers follow Target’s lead.

How far can retailers exploit smartphones?

As long as consumers are more willing to indicate their location on their GPS-enabled smartphones — and less wary of the privacy implications — it will pay for retailers to take advantage of the trend and the technology. There is a great opportunity to reach the ultimate target market — consumers who are already in your store — with incentives to stay, to browse and to buy. If stores can further discern the specific merchandise interests of customers in the store, the target marketing becomes that much more effective. I’m looking at this strictly for its marketing potential…again, the privacy issues involved are troubling but there has to be willingness to “opt-in” for the idea to work.


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